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Russia-Ukraine Deal Crumbling

Ukraine may resume offensive against militants in the nation's east, as bodies of two Ukrainian politicians were found and Ukrainian military plane was damaged by gunfire.

Ukraine’s president urged the resumption of an offensive against militants after U.S. Vice President Joe Biden’s visit, as an agreement with Russia to ease tensions in the former Soviet republic’s east neared collapse.

With eastern Ukraine in control of “terrorists” supported by Russia, the separatists have “crossed the line” after bodies of a local lawmaker and a member of the Batkivshchyna party were found today, acting President Oleksandr Turchynov said in a statement on the parliament website. Biden expressed U.S. support for Ukraine during a visit to Kiev.

With the April 17 accord in tatters, Ukraine is inching closer to a renewed push to dislodge militants in the restive east. The “active phase” of the military operation was suspended four days ago as Ukraine’s government pledged to abide by the agreement negotiated in Geneva by Ukraine, the European Union, the U.S., and Russia.

“The opportunity to generate a united Ukraine, getting it right, is within your grasp,” Biden told a group of prominent Ukrainians including confectionery magnate Petro Poroshenko, former Prime Minister Yulia Tymoshenko, and former world boxing champion Vitali Klitschko. “And we want to be your partner and friend in the project. We want to assist.”

A Ukrainian military plane was damaged by gunfire during a reconnaissance flight near Slovyansk, where pro-Russian activists have seized government buildings and set up road blocks, according to a statement by the Defense Ministry.

Pro-Russian forces who took over buildings in eastern Ukrainian cities have said they are not bound by the Geneva deal. The government in Kiev accuses Russian President Vladimir Putin of stirring unrest and exploiting the situation to possibly lay the groundwork for an invasion, while the U.S. underlined its support for Ukrainian politicians.

U.S. Secretary of State John Kerry warned Russian Foreign Minister Sergei Lavrov yesterday that “there will be consequences” if Russia doesn’t act “over the next pivotal days” to restrain separatists in Ukraine, spokeswoman Jen Psaki said in Washington. Lavrov called on the U.S. to hold Ukraine’s government accountable for not reining in what Russia portrays as right-wing militias.

The U.S. offered Ukraine $50 million in aid to help it pursue political and economic changes to stabilize its government, Biden’s office said in a statement. That includes $11.4 million for a May 25 presidential election that Biden said “may be the most important election” to date for the country of 45 million people on the Black Sea.

IMF Assistance

The International Monetary Fund’s (IMF's) executive board will receive within days a staff report detailing Ukraine’s proposed loan program, in an effort to approve emergency financing by early May, a board official said.

The report, which will describe the economic outlook, financing needs, and policy steps Ukraine agreed to take, may trigger a request for an expedited board review, according to the official, who spoke about private discussions on condition of anonymity. That means a typical two-week period for the board to study the report may be cut in half, with a vote next week, the person said.

The IMF is leading a $27 billion international loan package with a contribution of as much as $18 billion, which was agreed to in principle almost four weeks ago. The fund is seeking to complete its report as a multinational agreement with Russia to ease tensions in the former Soviet republic showed signs of collapse.

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